Revenue rose 33% to $21.3 million. Earnings before stock-based compensation more than tripled to $3.4 million -- or $0.14 a share. Analysts' recipe called for an adjusted profit of $0.12 a share, but the beat shouldn't take anyone by surprise. OpenTable has clocked in ahead of Wall Street in each of its first four quarters as a public company.
OpenTable went public at $20 a share nearly a year ago. However, it has served investors well by underpromising and overdelivering.
OpenTable's model is a good one. It installs high-tech digital reservation books in popular -- mostly high-end -- restaurants. It then offers its consumers a stand-alone site to book reservations throughout its network. Eateries pay OpenTable subscription fees to use the system and reservation fees for seated diners. If these seem like superfluous expenditures in a cutthroat industry, think again.
OpenTable's installed base of restaurants has grown by 23% over the past year. It also filled the reservation needs of 43% more patrons than it did a year earlier. In other words, restaurants keep flocking to the company's platform. Perhaps more importantly, the number of seated diners through OpenTable.com is growing even faster.
I recommended OpenTable to subscribers of the Motley Fool Rule Breakers newsletter service last year, and its shares have gone on to beat the market. The restaurant industry isn't a very compelling sector, particularly at the fickle high end, but there's always an opportunity for a company that incorporates technology to improve the sector.
It's true that the very reservations-based nature of OpenTable's platform will limit its appeal to mostly upscale establishments. Save for fancy chophouses Morton's
OpenTable's valuation has never been an early bird special, but its growth prospects continue to improve with every passing quarter. Just three months ago, analysts figured that OpenTable would earn $0.40 a share this year, and $0.58 a share come 2011. They now see the companyearning $0.52 a share this year and $0.77 a share next year.
OpenTable has thrived during a tough economic time, when eating out has become a luxury. One can only imagine how well it will do once the recovery truly brings out diners droves.
Have you ever used OpenTable for a restaurant reservation? Share your thoughts in the comment box below.
Longtime Fool contributor Rick Munarriz is a fan of new stocks, and has even recommended several fresh IPOs to newsletter readers in the past. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy has requested a four-top near the kitchen for 7:45 p.m.